Since most contemporary historians say that the Panic lasted from 1837-1843, isn’t that a little long for the standard “laissez faire” approach that Austrians cheer for? I don’t know that if this was just a deflation, and that prices and everything were doing okay, or if there were other factors. The Austrian report on this website doesn’t say much about the aftermath of the Panic and why it lasted so long. Rothbard says that while investment went down, consumption and output increased because of the lack of government roadblocks. Then why was Van Buren not elected, and what are the reasons for people saying the panic lasted so long? Just seems like a 6 year blob that isn’t talked about much.
According to Murray Rothbard, in his History of Money and Banking in the United States the economy actually revived in 1838 (p 100). This is backed up by Milton Friedman (1960 p 10). Historical records, however, record the depression returning in 1839. Professor Temin disagrees; in his Jacksonian Economy, he shows that while investment fell from 1839 to 1843 by 23%, real spending increased by 21% and real GNP increased by 16% (p. 155). This is despite the fact that there was massive monetary contraction and price deflation caused partially by the collapse of paper currency inflation and partially by the fact that states wildly borrowed money from the English and the Dutch and now had to repay that debt, leading to a negative balance of payments.
Interesting stuff, you should really check out Rothbard’s book on the subject.
Thanks, I guess the appropraite response to Van Buren losing the election would be he was running againist a veteran general? Did no one still think there was a bad depression going, or were they just misled? Thanks (I have a feeling it was the general aspect).
Well there supposedly was a high rate of unemployment, probably due to the high turnover from investment jobs to consumption jobs. Also, the Democrats were hated for the “spoils system,” which Harrison promised to abolish. Moreover, many states and many Americans called for the government to reinstate a national bank and to pay off state debt, which they still hadn’t paid off fully.
Just read Rothbard’s A History of Money and Banking: The Colonial Era to World War II, starting on page 98. It doesn’t go over the politics that much, but it does go over the economics of the various depressions in the 19th century.
Aside from what KK posted there is an entry in the LvMI journal relating soley to this crisises that can be found here: http://mises.org/journals/scholar/trask1.pdf
Really, for all intents and purposes the panic was over by like 1839? Do you mean like investment jobs as banking, and consumer as manufacturing? Was the date 1843 abritary, or did it actually have any meaning (like money supply still decreasing). I’m preparing for a comeback to someone who if i say we shouldn’t have done anything during the Great Depression, they can point to the Panic of 1837 where Van Buren did nothing, and how it still lasted to “1843”. Thanks alot for your help.
Again, read Rothbard’s work on the subject. It’s available for free online and I already posted the link and where the relevant portion starts at (page 99).
Economists agree that the economy was growing again in 1838. Most economists say that this is due to a reinflation of the bubble via the Bank of England, which financed greater US cotton imports to Europe. Both the English and the Dutch then financed many American businesses. This secondary boom turned into a bust in 1839. There was serious monetary contraction (deflation) as states and businesses had to pay back European financiers. This led to a serious fall in investment jobs, which are the “higher order” jobs like construction, engineering, manufacturing machinery, etc. But both consumer jobs and GNP increased in real terms. My guess is that the end date is set at 1843 because of a return in monetary expansion. People like Milton Friedman would have looked at the money supply figures and guessed that the economy had to return to growth at that point.
Thanks, appreciate your help